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What’s a Secured Line of Credit?

Florida Private Money | Orlando Commercial Loans

There can be some confusion about secured versus unsecured lines of credit when a person is looking for financing. It’s all about risk assumed by the Investor, so let’s reduce some of that confusion.

A secured line of credit reduces the risk to the Investor because a property or other asset is used as collateral for the loan. Therefore, the loan is “secured” by the asset. In most cases where a commercial property is involved, the collateral is the equity in the property. This is normally the case when hard money investors are offering money to a borrower for renovations or other uses.

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One advantage of using secured lines of credit is that the borrower’s credit rating is not an issue because the property equity is securing the loan. Investors may wish to see income statements or other proof that payments can be made, but less than perfect credit is not a barrier to obtaining secured loans.

If you are considering hard money investments with a secured loan on a commercial property, the borrower will normally only have to make interest payments during the life of the loan. Fees and other expenses can often be wrapped into the loan amount. It is important for borrowers to understand that they are using equity from their property to secure the financing, so an inability to pay can result in a loss of that property. It is also not a good idea to use personal assets such as a home to secure a loan. The Investor would repossess the property if the borrower could not make payments, then resell it to regain their investment.

If you have a property with significant equity and have been unable to obtain commercial financing through conventional banks, contact Shop Commercial Mortgage today. We have private investors who can offer you secured loans using the equity in your property. Shop Commercial Mortgage can help you get the money you need for renovations or other purposes, so give us a call.

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